Facebook is rallying ahead of its earnings

• Facebook is set to report fourth-quarter earnings after Wednesday's closing bell.
• Shares of the social network have fallen 34% since their record high last July, but have climbed nearly 8% this year
• Watch Facebook trade live.

Facebook was trading up 3.5% near $149.25 a share ahead of its report fourth-quarter earnings report which is due out after Wednesday's closing bell.

"Facebook is one of the more controversial stocks in our coverage (unsurprisingly), with bulls pointing to easy comps in the back half and potential for opex growth to be revised lower throughout the year, and bears noting third-party data/checks are mixed to negative," Instinet analyst Mark Kelley said.

The criticism on the social-media giant is mostly around privacy issues. In March, Facebook was linked to the Cambridge Analytica data scandal surrounding the 2016 presidential election, causing it to shed $50 billion of market value in two days.

The stock recovered, but then plunged more than 20% when Facebook said that its top-line growth rates would decline by "high single-digit" percentages in the coming quarter as it ramped up its self-declared war on safety and security. Shares are down 32% from their record high of $218.62 set on July 25.

The data scandal and disappointing forecast prompted Wall Street to sound the alarm the stock. Facebook is "not as in control of its business as it needs to be," Brian Wieser, a long-time bear at Pivotal Research Group said in October.But Susquehanna's Shyim Patel carries a more bullish view. Patel told clients in a Monday note that concerns around potential regulation are "already baked into the stock" and that Facebook "deserves a premium valuation" given its dominance in the advertising space. He has a $220 price target - 47% above where shares are trading on Wednesday. Facebook is expected to report earnings of $2.18 a share on revenue of $16.4 billion, according to analysts surveyed by Bloomberg.The stock gained 12% so far this year.

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